Australia’s life insurance sector is expected to see moderate expansion over the next four years, with gross written premiums (GWP) forecast to increase from $26.2 billion in 2025 to $30.5 billion by 2029.
This represents a compound annual growth rate (CAGR) of 3.9%, according to recent analysis by GlobalData.
The report anticipates a 2.9% rise in GWP for 2025, citing factors such as a recovering economy, an aging population, and greater public awareness of health and financial planning.
Improved household income and spending are also expected to support demand for life insurance products.
A significant decrease of 24.4% in life insurance GWP was recorded in 2024, which GlobalData attributes to changes in accounting standards following the adoption of IFRS 17.
The report noted that this technical adjustment does not reflect underlying market weakness.
Swarup Kumar Sahoo, senior insurance analyst at GlobalData, said demographic changes and economic pressures are reshaping the sector.
“Insurers must navigate these challenges while delivering value to policyholders through tailored products and services. The emphasis on affordability and accessibility will be crucial as the industry adapts to the changing needs of consumers,” he said.
Medical inflation continues to influence the cost structure of life insurance. The Australian Bureau of Statistics reported a 4.1% year-on-year increase in health-related inflation for the first quarter of 2025 (Q1 2025).
Rising medical expenses are likely to drive up claims costs, prompting insurers to reassess their pricing strategies.
Australia’s population is aging, with those aged 65 and over expected to make up more than 22% of the population by 2026, up from 16% in 2020.
The introduction of the Aged Care Act 2024 is expected to raise awareness about financial planning for older Australians, which may support increased uptake of life and health insurance.
Personal accident and health (PA&H) insurance is also projected to grow, with GWP forecast to rise at a CAGR of 4.6% between 2025 and 2029, compared to 3.8% in the previous four years.
Australian households continue to face pressure from rising living costs, including higher interest rates and inflation.
According to the Cost of Living Index, 71% of Australians are concerned that these economic conditions could affect their ability to maintain or purchase life insurance.
Sahoo observed that these challenges highlight the importance of financial protection and that insurers are adapting by offering more flexible and affordable options.
“The increasing prevalence of policy cancellations due to affordability concerns may push insurers to enhance customer engagement and retention strategies,” he said.
GlobalData’s analysis suggests that the outlook for Australia’s life insurance market remains positive, driven by demographic trends, economic factors, and ongoing product innovation.
Insurers are expected to prioritise the development of flexible and cost-effective solutions to address the needs of a diverse customer base.
Demand for life insurance is anticipated to rise as awareness of financial security and comprehensive coverage grows in a changing economic environment.
Meanwhile, in June 2025, Australian financial regulators provided an update on how life insurers are addressing concerns about premium increases, product structures, and consumer disclosure.
The review identified that some premium increases were not always consistent with policy contracts or customer expectations.
Products marketed as “level premium” options were found to be particularly prone to consumer misunderstanding.
By the end of 2024, Australians were spending approximately $9.4 billion annually on individually held life insurance purchased through financial advisers.
Insurers have pointed to factors such as age-based increases, cover indexation, and base rate adjustments as reasons for premium rises over the past five years.
ASIC and APRA noted that many insurers have reviewed their pricing practices and refunded overpayments where increases were not contractually justified.
Insurers have also revised policy wording to clarify when and how premiums may change, replacing broad statements with more specific explanations.
Marketing and sales materials have been updated, with older terms like “level” and “stepped” premiums replaced by CALI-endorsed labels such as “variable premium” and “variable age-stepped premium.”
These changes are intended to clarify that premiums may increase depending on various factors.
